Case Background
On
September 1, 2022, Florida Public Utilities Company, Florida Public Utilities
Company-Indiantown Division, Florida Public Utilities Company-Fort Meade, and
Florida Division of Chesapeake Utilities Corporation d/b/a Central Florida Gas
(jointly, Companies) filed a petition for approval of revised swing service rider
rates and associated tariffs for the period January through December 2023. FPUC
is a local natural gas distribution company (LDC) subject to the regulatory
jurisdiction of the Commission pursuant to Chapter 366, Florida Statutes
(F.S.). FPUC is a wholly-owned subsidiary of Chesapeake Utilities Corporation,
which is headquartered in Dover, Delaware. Chesapeake is also an LDC subject to
the Commission’s jurisdiction under Chapter 366, F.S., and is an operating
division of Chesapeake Utilities Corporation.
The Commission
first approved the Companies’ swing service rider tariff in Order No.
PSC-16-0422-TRF-GU (swing service order) and the initial swing service rider
rates were in effect for the period March through December 2017. As required in the swing service order,
the Companies submitted the instant petition with revised 2023 swing service
rider rates for Commission approval by September 1, 2022. The January through
December 2022 swing service rider rates were approved in Order No. PSC-2021-0417-TRF-GU. The swing service rider is a cents per
therm charge that is included in the monthly gas bill of transportation
customers.
In the pending
rate case Docket No. 20220067-GU, the Companies proposed to consolidate the
current 54 rate classes across the four natural gas utilities into 16 rate
classes. If the Commission approves the consolidated rate classes in the rate
case docket, the Companies would need to allocate the swing service rider costs to the appropriate revised rate classes
and recalculate the swing service rider rates. If the Commission denies the
Companies’ proposal to consolidate the rate classes, the 2023 swing service
rider rates as approved in this docket would stay in effect.
On September 15,
2022, the Companies waived their 60-day file and suspend provision of Section
366.06(3), F.S., via an e-mail, which has been placed in the docket file.
During the evaluation of the petition, staff issued a data request to the
Companies for which responses were received on October 6, 2022. The updated
swing service rider rates and associated revised tariff sheets are shown in
Attachment A to the recommendation. The Commission has jurisdiction over this
matter pursuant to Sections 366.04, 366.05, and 366.06, F.S.
Discussion
of Issues
Issue 1:
Should the Commission approve the Companies'
proposed swing service rider rates and tariffs for the period January through
December 2023?
Recommendation:
Yes. The Commission should approve the Companies’
proposed swing service rider rates and tariffs for the period January through
December 2023. The costs included are appropriate and the methodology for
calculating the swing service rider rates is consistent with the swing service
order.
If the Commission approves the Companies’ proposal to
consolidate the rate classes in rate case Docket No. 20220067-GU, within 10
business days after the Commission vote in the rate case docket, the Companies should
recalculate the swing service rider rates for the consolidated rate classes. The
revised swing service rider rates should be submitted for staff’s
administrative approval and should be effective concurrent with any revised
Commission-approved base rates in the rate case docket. If the Commission
denies the Companies’ proposal to consolidate the rate classes, the swing
service rider rates as approved in this docket should stay in effect for the
period January through December 2023. (Guffey)
Staff Analysis:
The Companies incur intrastate capacity costs when
they transport natural gas on intrastate pipelines (i.e., pipelines operating
within Florida only). The Companies have two types of natural gas customers:
sales and transportation. Sales customers are primarily residential and small
commercial customers that purchase natural gas from an LDC and receive
allocations of intrastate capacity costs through the Purchased Gas Adjustment
(PGA)
charge. Of the joint petitioners in the instant docket, only Florida Public
Utilities Company and Florida Public Utilities Company – Fort Meade have sales
customers. Transportation customers receive natural gas from third party
marketers, also known as shippers
and, therefore, do not pay the PGA charge to the LDC. The swing service rider
allows the Companies to also recover allocations of intrastate capacity costs
from transportation customers.
Updated 2023 Swing Service Rider Rates
The updated 2023 swing service rider rates were calculated
based on the same methodology approved in the 2016 swing service order. As
stated in paragraph 9 of the Companies’ instant petition, the total intrastate
capacity costs for the period July 2021 through June 2022 are $26,231,749. The
total intrastate capacity costs reflect payments by the Companies to intrastate
pipelines for the transportation of natural gas, pursuant to Commission-approved
transportation agreements. In addition, the intrastate capacity costs include
payments associated with a software tool to manage customer usage and assist in
determining the gas supply and capacity needs for the Companies, legal and consulting
fees, and subscription fees to obtain market data and gas daily pricing.
Of these costs, $6,455,937 will be billed directly to
certain large special contract customers. The remaining costs of $19,775,812 are
allocated between sales and transportation customers and will be recovered
during the period January 1, 2023 through December 31, 2023.
The Companies used actual therm usage data for the period July
2021 through June 2022 to allocate the intrastate capacity costs. Based on the
usage data, the appropriate split for allocating the cost is 71.16 percent or $14,072,343
to transportation customers and 28.84 percent or $5,703,469 to sales customers.
The transportation customers’ share of $14,072,343 is further allocated to the
various transportation rate schedules in proportion with each rate schedule’s
share of the Companies’ total throughput. The sales customers’ share of the
cost of $5,703,469 is embedded in the PGA.
To calculate the swing service rider rates, the
transportation customers’ share of the cost is allocated to each rate schedule
and is divided by the rate schedule’s number of therms. The swing service rider
charge is billed directly to the customers. The swing service revenues the
Companies are projected to receive in 2023 total $14,072,343.
Credit to the PGA
The total intrastate capacity costs are embedded in the
PGA with the projected 2023 swing service rider revenues incorporated as a
credit in the calculation of the 2023 PGA. The amount credited to the 2023 PGA
is $14,072,343 plus $6,455,937 received from special contract customers, for a
total of $20,528,280.
COVID-19 Regulatory Asset Settlement Agreement
The Companies, in their 2023 swing service rider
calculation, included additional costs in accordance with the COVID-19
Regulatory Asset Settlement Agreement (Agreement) approved in Order No.
PSC-2021-0266-S-PU. This
Agreement allows FPUC’s natural gas utilities and electric division to recover in
2022 and 2023, a total of $2,085,759 of incremental expenses for costs incurred
due to COVID-19. Of this amount, $731,639 ($365,820 annually) is attributable
to natural gas customers, while the
remainder ($1,354,120) is attributable to FPUC’s electric division.
Using the same allocation methodology in the calculation of the swing service
rider, 71.16 percent, or $520,630 ($260,315 annually), will be allocated to the
transportation customers and 28.84 percent, or $211,010 ($105,505 annually)
will be allocated to sales customers and recovered through the PGA. The
proposed swing service rider rates include both the intrastate capacity costs
and the COVID-19 costs approved in the Agreement.
Conclusion
Based on its review of the information provided in the
petition and in response to staff’s data requests, staff recommends that the Companies’
proposed swing service rider is reasonable. Staff reviewed the total projected
intrastate capacity costs and verified that the costs included are appropriate.
The Commission should approve the proposed swing service rider rates for the
period January through December 2023. The costs included are appropriate and
the methodology for calculating the swing service rider rates is consistent
with the swing service order.
If the Commission
approves the Companies’ proposal to consolidate the rate classes in rate case Docket
No. 20220067-GU, within 10 business days after the Commission vote in the rate
case docket, the Companies should recalculate the swing service rider rates for
the consolidated rate classes. The revised swing service rider rates should be submitted
for staff’s administrative approval and should be effective concurrent with any
revised Commission-approved base rates in the rate case docket. If the
Commission denies the Companies’ proposal to consolidate the rate classes, the
swing service rider rates as approved in this docket should stay in effect for
the period January through December 2023.
Issue 2:
Should this docket be closed?
Recommendation:
Yes. If Issue 1 is approved and a protest is filed
within 21 days of the issuance of the order, the tariff should remain in
effect, with any revenues held subject to refund, pending resolution of the
protest. If no timely protest is filed, this docket should be closed upon the
issuance of a consummating order. (Dose, Crawford)
Staff Analysis:
If Issue 1 is approved and a protest is filed within
21 days of the issuance of the order, the tariff should remain in effect, with
any revenues held subject to refund, pending resolution of the protest. If no
timely protest is filed, this docket should be closed upon the issuance of a
consummating order.
